Managing

Topics: New product development, Innovation Pages: 7 (1929 words) Published: January 28, 2014
Case Studies

Kao Corporation1
Background
The Kao Corporation is Japan’s largest soap and cosmetic company. They have developed from being a minor player to being number two in the Japanese market in less than ten years and are the sixth largest soap and cosmetic company in the world.

Innovation Claim to Fame
Kao was founded in 1890 as the Kao Soap Company with the motto, ‘Cleanliness is the foundation of a prosperous society’. In the 1940s Kao launched the first Japanese laundry detergent, and in the 1950s the company launched dishwashing and household detergents. In the 1970s and 80s the company grew more rapidly than ever, based on innovative products and new businesses. For example, they diversified into cosmetics, hygiene and floppy disks. By 1991 sales were $4.7 billion and the company made 564 household products; by 2000 these figures were around ¥100bn across 650 products.

How They Manage Innovation
Kao combine the strengths of a disciplined and formalized product development system with the cultural values of learning and continuous improvement to ensure that steady-state innovation succeeds on a continuing basis. At the same time their commitment to R&D and to developing and exploiting strong technological competencies provides a rich pool in which to fish for new development possibilities. Targeting where to move next in volatile consumer markets is helped by rich and extensive information systems which connect the market rapidly with the R&D and manufacturing heart of the business.

Innovation Strategy and Leadership
Innovation is a core value of the business but is generally expressed in terms of learning (see later) – the sense is that Kao needs to be continuously learning about technologies, users, key trends in society, etc. and then to be able to combine these signals into new combinations of products and processes. It sees itself as a knowledge-based company and takes its competencies seriously. It has mapped them; a simplified version of the Kao Competencies map (1996) is shown on the following page.

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Case contributed by Dr. David Francis of CENTRIM at the University of Brighton. It is based on interviews and secondary materials.

©2005 Joe Tidd, John Bessant, Keith Pavitt
www.wileyeurope.com/college/tidd

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Case Studies

Enabling the Process…
New Product Development (NPD) at Kao is guided by four principles: 1. Every product must be useful to society.
2. Products must use innovative technology.
3. Products must offer customers value.
4. We must study consumers needs and reactions to our products. At every stage in the product development process ideas are developed, criticized, discuss, refined or altered in the light of any new information or new learning. Theconscious aim to ‘pour in’ all relevant technologies so that a genuine advance can be made in the product offered.

The company has identified five fundamental sciences from which it derives its products. These sciences are:
• Fat and Oil Science
• Surface Science
• Polymer Science
©2005 Joe Tidd, John Bessant, Keith Pavitt
www.wileyeurope.com/college/tidd

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Case Studies



Biological Science
Applied Physics

From these fundamental sciences the company has developed products in a wide range of application domains.
The company funds corporate research centrally (based on the five fundamental sciences); the company view is that ‘original technology, developed through basic research, forms the foundation of Kao’s ‘future’.

Products are developed by Product Development Groups. As a product moves from the idea stage to test marketing so different groups become involved – but, since the company has an open communication system, all those involved know what is happening. There are formal NPD review meetings built into the system but much of the development work is conducted in informal meetings.

Kao test the potential market for their new products by sending out ‘intelligence collectors’...
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